Correlation Between Trilogy Metals and Lundin Gold

Can any of the company-specific risk be diversified away by investing in both Trilogy Metals and Lundin Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Trilogy Metals and Lundin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trilogy Metals and Lundin Gold, you can compare the effects of market volatilities on Trilogy Metals and Lundin Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Trilogy Metals with a short position of Lundin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trilogy Metals and Lundin Gold.

Diversification Opportunities for Trilogy Metals and Lundin Gold

0.34

Correlation Coefficient

Trilogy Metals  Lundin Gold

Weak diversification

The 3 months correlation between Trilogy and Lundin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Trilogy Metals and Lundin Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Gold and Trilogy Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Trilogy Metals are associated (or correlated) with Lundin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Gold has no effect on the direction of Trilogy Metals i.e., Trilogy Metals and Lundin Gold go up and down completely randomly.

Pair Corralation between Trilogy Metals and Lundin Gold

Assuming the 90 days trading horizon Trilogy Metals is expected to generate 6.85 times more return on investment than Lundin Gold. However, Trilogy Metals is 6.85 times more volatile than Lundin Gold. It trades about 0.13 of its potential returns per unit of risk. Lundin Gold is currently generating about 0.19 per unit of risk. If you would invest  70.00  in Trilogy Metals on September 4, 2024 and sell it today you would earn a total of  86.00  from holding Trilogy Metals or generate 122.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Trilogy Metals  vs.  Lundin Gold

Trilogy Metals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Trilogy Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

Lundin Gold

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Lundin Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trilogy Metals and Lundin Gold

The main advantage of trading using opposite Trilogy Metals and Lundin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trilogy Metals position performs unexpectedly, Lundin Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lundin Gold will offset losses from the drop in Lundin Gold's long position.

The idea behind Trilogy Metals and Lundin Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.